HOW TO RAISE YOUR PRICES WITHOUT HURTING YOUR BUSINESS
This is a just-do-it post. Here is what you need to do.
1. Set your fears aside. They may be many. Big one. Little ones. Don’t try to analyse them right now. Just set them aside. The fears are unfounded and without any basis.
2. Figure out your true price. What is the right amount to charge? What are other cake decorators in my local area charging? If they are also undercharging then check what other cake decorators of your skill level are charging. Can I match or position myself as slightly more expensive. Do not try to be cheaper to undercut their prices. This is counterproductive. And PLEASE do not try to charge the same as waitrose or M&S!!!
3. Communicate your new prices to your customers: This could be by simply displaying your prices boldly on your website and other marketing materials. It could be sending out an email. The end of the year is usually a great time to increase prices. You may wish to offer your old customers an extension of a few weeks before the new prices kick in for them but certainly charge new customers the new prices.
4. Set a minimum price and stick to it. Communicate it. DO NOT GO BELOW IT!
5. Communicate the benefits: The purpose of marketing is to let you customers know what is special about the cakes you offer. Is it the taste? Is it free delivery and set-up? Is it fresh ingredients? Is it the famous clients you have made cakes for? Re-communicate the BENEFITS of ordering cakes from you and the value of the service they are getting.
6. Make a friends and family list and put ONLY FIVE NAMES on it. These are the five people that you will make cakes for at discounted prices. I found this particularly useful because the temptation is to make cakes cheap for my neighbours or my doctor or my kids’ teacher or whoever was nice to me but now, IF THEIR NAME IS NOT ON THE LIST THEN THEY DON’T GET A DISCOUNT.
7. Make small increases if the jump is too scary – A 10% increase or a £10 increase per cake will add up over the long term. A 10% increase will actually add up to more than a 10% increase in your overall income. If you increase prices by just 10% every year you will still see steady business growth.